What is MiFID II?

MiFID II is a European Union regulation that has the aim of making financial markets more open,
efficient, resilient, and transparent. MiFID stands for Markets in Financial Instruments. As the name
suggests, MiFID II, is the second installment of MiFID which was implemented in 2007. The EU Official
Journal published the MiFID II directive and its corresponding regulation MiFIR on June 12th 2014. It
will come into force as of January 3rd, 2018.

MiFID II is the directive from the EU commission. Accompanying MiFID is the MiFIR, Markets in Financial
Instruments - Regulation. MiFIR is the European regulation enforcing the MiFID directives. To interpret
this directive and regulation another EU body becomes involved. That body is ESMA (European Securities
and Markets Authority). They provided those affected by MiFID II a set of guidelines, known as RTS or
regulatory technical standards. These technical standards have since been adopted by the European
Commission. These documents outline a vast array of standards. Some of these are time synchronization,
timestamp granularity, trade reporting, transaction reporting, record keeping, and kill switches.

Is InfoReach Prepared?

As a leading provider of trading solutions InfoReach Inc. has established a MiFID II program providing necessary
functionality and support to help its clients to be compliant with the relevant MiFID II Regulatory Technical
Standards (RTS) and other relevant regulatory requirements for all asset classes, through the delivery of MiFID
II trading solutions. Several key areas were identified for enhancements to support the requirements presented
in the RTS documents.

Time Synchronization

While living strictly behind the scenes MiFID II has elevated time synchronization standards across the
board. FINRA had previously set the standard for time synchronization, with which InfoReach had been in
compliance. The new time sync standard is more stringent and requires a path to one of several
particular synchronization sources. To meet this need InfoReach has partnered with GTT. With this
partnership InfoReach has been able to establish synchronization with the National Institute of
Standards and Technology in Boulder, Colorado.

Broker Certification for MiFID II

An important piece to the MiFID II changes is the increased reporting requirements, discussed in reporting to APA
and reporting to ARM. In order to adhere to these reporting requirements we first need to have all the
information necessary from the electronic messaging. InfoReach has been working with broker partners to certify
with them these changes in a timely manner and expects that all EU partners will be updated by the end of the
year. Some of the new requirements have long been supported by InfoReach such as Last Capacity, Last Market, and
Last Liquidity Indicator. It also includes many of the important fields such as LEI, indications of systematic
internaliser, and party ID.

Reporting to APA

InfoReach has integrated with TRADEcho. TRADEcho’s position as an Approved Publication Arrangement (APA),
gives InfoReach clients a venue for publishing trades they have executed and meet their MiFID II
requirements for post-trade reporting. TRADEcho, the suite of reporting services hosted and operated by
the London Stock Exchange, delivered in partnership with Simplitium, has been facilitating European
trade reporting for MiFID I for 10 years and is extending these services to cover the increased MiFID II
requirements. TRADEcho’s services cover all MiFID II asset classes and provide firms with the tools they
require to meet their pre and post-trade transparency obligations.

Reporting to ARM

InfoReach has joined the UnaVista partner program in order to help our clients meet their ARM (approved
reporting mechanism) needs. As a partner we are able to access UnaVista testing environments to quickly
onboard clients with their reports.

Risk Controls / Kill Switch

InfoReach trading solutions facilitate emergency kill functionality to immediately suspend any further automated
trading and cancel all unexecuted orders submitted to the connected trading venues by any of the traders or
algorithms. Automated protection functionality help to detect faulty patterns like submitting duplicate orders
and overflowing with rejects, and is accompanied with circuit breakers to halt further trading.

InfoReach trading systems are equipped with state-of-the-art visual tools, notification mechanisms, data
surveillance and reporting means to empower clients with sophisticated real-time monitoring, alerting, and
decision making. Risk control functionality allows for automatically blocking or canceling orders that do not
meet desired parametrization or are initiated by a trader without sufficient level of permissions, for not
sending uncommonly large orders, for throttling and preventing excessive number of outgoing messages, etc.
Orders blocked by pre-trade controls can be revised and resubmitted.